Miami Today: Week of Thursday, January 15, 2015

WEEK OF THURSDAY, JANUARY 15, 2015

A Singular Voice in an Evolving City

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OUTLOOK 2015

13 downtown projects headed for completion in 2015, pg. 16 FILM COMPLEX LEASE: A startup company wants to open a 900,000-square-foot movie production studio in Northwest Miami-Dade on county-owned property. On Tuesday, a county commission committee gave a preliminary OK for government staff to negotiate a lease with the company. Staff won’t start negotiations until the full commission votes to begin talks. The startup, Miami Ocean Studios Enterprises LLC, has also applied to the county for $10 million of taxpayer funds to go toward infrastructure improvements needed for the movie complex. That application is pending.

High-flying hotels might face pressure on room rates, pg. 19

THE ACHIEVER

BY JOHN CHARLES ROBBINS AND LIDIA DINKOVA

BONDS FOR FOOTBALL STADIUM: The Miami-Dade County Industrial Development Authority, an entity separate from county government that issues bonds on behalf of projects deemed economically beneficial, is to issue a $100 million taxable revenue bond, money that’s to cover part of the cost of reconstructing Sun Life Stadium. The overall renovation cost for the stadium is $425 million. Work is to include new seats and parking lot improvements. On Tuesday, a county commission committee gave a preliminary OK for the industrial development authority to issue the $100 million bond. The approval isn’t final until the full county commission signs off as well.

LOCAL PREFERENCE: County Commissioner Daniella Levine Cava told Miami Today that she is considering drafting legislation that would promote local preference for products produced in the county. MiamiDade currently has local preference legislation for businesses that aims to give local businesses a competitive edge for county-procured contracts. Ms. Levine Cava said she hasn’t honed details of her legislation but essentially it would promote the use of local products. For example, it would promote the use of Redland-raised produce or tropical fruits by kitchens at local hospitals. “Every time we use our money at home we are having a multiplier effect,” she said.

MAJOR LEAGUE SOCCER: Today (1/15) a Miami-Dade County Commission committee is to consider whether the stadium at Florida International University should become the temporary site for a Major League Soccer (MLS) franchise in Greater Miami. David Beckham, a British former soccer player, last year expressed interest in opening an MLS franchise in Miami, specifically on bayfront property. While efforts were unsuccessful, the search continues, according to county records.

Now, Commissioner Juan Zapata is proposing that the MLS franchise use the FIU stadium temporarily until a permanent site is found.

Photo by Marlene Quaroni

Cathy Swanson-Rivenbark

Seeks traffic control, balanced growth for Gables The profile is on Page 4

County hall derails rail for bus rapid transit

BY LIDIA DINKOVA

A county hall drive to ease traffic congestion has turned toward running buses on thoroughfares originally slated for rail service.

Miami-Dade County is taking a hard look at running buses in four corridors, and Miami Beach wants buses on the MacArthur Causeway before planned light rail is built there.

While buses run in the county and over the causeway, the latest efforts focus on a specific service, bus rapid transit (BRT), in which buses usually run within a designated lane to avoid traffic.

The shift from rail to rubber tires reflects a push to ease traffic quickly and more affordably. It also reflects a shift from the original voter-approved goals for how to spend a countywide half-cent sales surtax.

In 2002, county voters OK’d the surtax along with a transportation plan to use the revenue to extend the Metrorail on eight major thoroughfares.

“There wasn’t enough money to do that,” said Charles Scurr, executive director of the Citizens’ Independent Transportation

AGENDA

New I-395 bridge gets a head start

Trust, which oversees surtax spending.

“So what’s happened is you are coming up with different solutions for each corridor.

For some of the corridors, like Northwest 27th Avenue, we’re talking about BRT.” Aside from Northwest 27th Avenue, Miami-Dade County is looking to run BRT on Douglas Road, Flagler Street and Kendall Drive.

BRT is much cheaper than rail, according to county estimates.

The completed 2.4-mile extension of Metrorail to Miami International Airport cost about $210 million per mile. That’s much more than the $13 million per mile it would cost to begin BRT in the 11.5-mile Northwest 27th Avenue corridor.

At last week’s workshop of the Metropolitan Transportation Organization (MPO), the county’s transportation planning entity, officials’ nod toward BRT was evident.

“It sounds to me like everybody here likes BRT. It almost feels like there has been an epiphany somehow,” said Miami Beach Mayor Philip Levine, who sits on the MPO board.

Not everyone at the workshop was on board, however. Some members said the

county should think big.

“What was happening in the minds of people in the early 1900s when they first started to build the subway system in New York City?” asked county commission Chairman Jean Monestime, who sits on the MPO board. “And what’s going through my mind is that as we miss the opportunity of extending Metrorail north… what’re we going to say in another 30 years from today if we just do the basic, average thing because we’re trying to play it safe?”

Under federal definitions, BRT could be heavy, meaning the system has more features such as a designated lane for the buses, or light, where the buses run with traffic or just partially within a designated lane.

County Commissioner Barbara Jordan, who sits on the MPO board, said she has pushed for heavy BRT. Since this bus service runs within a designated lane, it paves the way for a future rail line, which might later take over the lane.

“Our goal should be where all of the corridors in the future look more toward heavy BRT,” Ms. Jordan said, “if we expect to ever go to the Metrorail system.”

Major improvements to I-395, including a new “signature” bridge, are to begin earlier than planned. The Florida Department of Transportation has moved up its schedule and a call for bids could go out this year.

Construction might begin by late 2016.

The $600 million project will rebuild 1.4 miles of I-395 from the I-95/Midtown interchange to the west channel bridge of the MacArthur Causeway in Miami.

Last October, the department was using a tentative schedule calling for work to begin in 2018.

Asked why the state is moving ahead earlier, department spokesperson Tasha Cunningham told Miami Today, “The FDOT is committed to the project and was able to pull the funding in earlier, enabling the project to go to construction sooner.”

Tentatively, she said, bid advertisement will be in the fall with construction to begin at the end of 2016 or early 2017.

One contractor with a global presence is eyeing the job.

Skanska, an international construction company, is to submit a proposal as part of a joint venture, said Mike Turner, program manager in Large Projects Group at Skanska USA Civil.

The company, based in Sweden, works internationally. In the US, its units include Skanska USA Civil and Skanska USA Building.

Last October, the state reported that bridge design options had been whittled down to two: Wishbone or Lotus. Now the department is saying a third option might come into play.

“The final design has not been chosen and will be between the Wishbone, Lotus or an option proposed by the design build team,” Ms. Cunningham said.

The department and the Aesthetic Steering Committee must approve the design, she said.

“We will not know the design build option until the teams vying for the job present their ideas.”

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$600 MILLION IN IMPACT FUELED BOAT SHOW ACCORD ...

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LARKIN PRESCRIBES CITY’S FIRST PHARMACY COLLEGE ...

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EMPLOYMENT’S GAINS ACCELERATE AS OIL PRICES FALL ... 13

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MASS TRANSIT’S ROUTE TO MIAMI WILL BE A SLOW TRIP ... 15

SEAGIS, ‘A PLAYER,’ BUYS 93RD WAREHOUSE IN REGION ...

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STRONG RESIDENTIAL SECTION MIGHT SEE PRICES SLIP ...

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WEEK OF THURSDAY, JANUARY 15, 2015

TODAY’S NEWS

MIAMI TODAY

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Larkin hospital compounding city’s first pharmacy college

BY SUSAN D ANSEYAR

Larkin Community Hospital is moving ahead with its college of pharmacy, the first in Miami, and plans to open it in September 2016.

Rather than wait for groundbreaking on the 48-acre site that the hospital bought in the Naranja Lakes community near Homestead, the hospital is installing the school at 18301 N Miami Ave., the former Everest University building, which it recently bought for $5.5 million, said Dr. Jack Michel, president and chairman of Larkin. He told Miami Today it’s more cost effective at this time to renovate the 44,000-square-foot building than to build a new facility and then eventually move the college of pharmacy to the Naranja Lakes campus.

Dr. Michel said the hospital doesn’t

want to slow down its goal to have a health sciences campus in Naranja and decided to forge ahead once it found the Everest University building.

“We’ve been working on a master plan for what can be done in Naranja and are still analyzing the timing of how the campus will evolve over the next 10 years or so,” he said. The hospital in 2013 spent $4.2 million on the property at Southwest 280th Street and 145th Avenue. The hospital said at the time of acquisition that over 10 years it planned to spend $68 million on the campus.

A few weeks ago, Dr. Michel noted, Larkin received a $5 million incentive from Miami-Dade County through its economic development fund. He said the money, approved by the county commission in a group of multi-million-dollar economic development incentive grants

for major projects, is slated for the health sciences campus’s infrastructure.

The Homestead campus has 1.4 million square feet for development of the health sciences campus, which is to include Larkin’s existing School of Nursing and College of Biomedical Sciences and its proposed College of Pharmacy, College of Medicine and College of Dentistry.

Dr. Michel said the campus will be a model of interdisciplinary training and be anchored by a Magnet Middle School and a high school designed to attract minorities currently attending MiamiDade public schools into healthcare professionals.

Once it opens, the medical school is expected to train 150 doctors in a fouryear program. In addition to the schools, plans include student housing, medical

and professional office space, and support buildings.

At this time, Dr. Michel said, the hospital doesn’t have a firm date when the campus will open. There are a lot of moving parts, he said, but the hospital will have a better idea by the end of this year.

The for-profit Larkin Community Hospital is designated as a statutory teaching hospital with more than 200 medical, pharmacy and dental residents in 32 specialty programs at clinical settings in South Florida, primarily within federally qualified centers including Community Health of South Florida (currently the only teaching health center in Florida offering its own three medical programs), Borinquen Health Care Center, Miami Beach Community Health Center and Jessie Trice Community Health Center.

More available land helps shift industrial growth to Medley

BY L IDIA DINKOVA

Ocean freight-forwarders, cruise lines and other industrial space tenants have been increasingly seeking warehouse and distribution hubs in the northwestern parts of Miami-Dade County.

Historically, the centrally located City of Doral and the Airport West area were prime choices for companies seeking industrial space. But lately such companies have been migrating northwest to the Town of Medley, experts said.

Leading cruise industry retailer Starboard Cruise Services is now a tenant in the Medley market, according to JLL, a national commercial real estate and investment management firm with offices in South Florida. In addition, beachwear stores operator Marco Destin recently occupied a 43,000square-foot site at the Flagler

Station business park in Medley, according to JLL. “There’s more availability of land in Medley than Airport West,” said Steve Medwin, managing director at JLL. Not only is more land available in Medley, but industrial space construction in the town is now more common than in the more traditional industrial space markets like Doral.

Because Doral is also home to a growing residential population, demand for residences tends to trump demand for industrial space.

“Typically, in places like Doral, where there’s a much heavier residential and office component than Medley, they’re less likely to rezone industrial land. They prefer more residential uses,” Mr. Medwin said.

While in Doral there might be available land zoned for industrial development, Mr. Medwin

added, if adjacent condominiums are occupied and there’s demand for residences, market forces favor the development of more condominiums as opposed to industrial use.

“It’s all a function of the location and what it’s more useful for,” Mr. Medwin said.

Steve Medwin Yet it’s not only the land restrictions in Doral and Airport West that are prompting the industrial space growth in Medley.

The town’s strategic location – being equidistant from PortMiami and Port Everglades as well as near the Turnpike – and its lower rental rates make it desirable for distribution and warehouse facilities.

The average asking rent for industrial space in Medley was

$6.02 per square foot, which is lower than the $7 per square foot average asking rent in Airport West, according to JLL statistics for July, August and September.

The northwest shift of the industrial space market in Miami-Dade has also prompted a relatively new trend in the county: speculative construction.

That means a developer is building industrial space without having a tenant in mind but speculating that the growing demand would bring a tenant in the future. It’s also speculative from the tenant’s point of view – future tenants don’t get to see the building they’ll be moving their operation into because leasing and purchase deals are closed before the facility is built.

“It’s a new phenomenon in the history of Miami,” Mr. Medwin said. “Traditionally, Miami was a place where you had to build it and see it and touch it, but we have started to

see a trend of leasing buildings under construction.”

Marco Destin, the beachwear stores operator; Bed Bath & Beyond, and global freight consolidation services provider Vanguard Logistics Services are all Medley industrial tenants that closed their space deals before the facility they were moving into was built, Mr. Medwin said.

The northwestern shift in demand for industrial space is evident in the vacancy rates in the Medley and Airport West markets.

Vacancy in Medley was 6.2%, much lower than the 11.2% rate in Airport West for July, August and September, according to JLL data.

And that’s not necessarily bad news.

“The nice thing is,” Mr. Medwin said, “They’re not leaving South Florida. They’re just moving around in the MiamiDade industrial market.”

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WEEK OF THURSDAY, JANUARY 15, 2015

TODAY’S NEWS

MIAMI TODAY

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$600 million a year impact engine propelled boat show deal

BY JOHN CHARLES ROBBINS

By securing the Miami International Boat Show for the City of Miami for 2016, city commissioners have ensured an infusion of money and jobs into the local economy.

That’s part of the assessment made by city officials who worked to negotiate the boat show anchoring on city property for next year’s event, and perhaps for many years thereafter.

According to the boat show organizers – who will celebrate their 75th anniversary in 2016 – the boat show fills hotel rooms, creates thousands of jobs and sinks more than $600 million into the South Florida economy each year.

All of these economic benefits were mentioned in a resolution adopted Jan. 8 by city commissioners approving a license with the National Marine Manufacturers Association to host the 2016 show at cityowned Marine Stadium Park on Virginia Key. The association represents more than 1,400 companies involved in various productions used by recreational boaters.

The boat show is the premiere gathering place for more than 100,000 boaters, 50% of whom travel to the show from outside Florida, and 10% who travel from outside of the US, the resolution states.

An estimated 45,000 workers prepare the boat show each year, the show accounts for the equivalent of about 200,000 hotel room nights, and the show provides the equivalent of 6,500 full-time jobs, the resolution says.

More than 1,500 businesses that call Miami home depend on the boat show, and Florida businesses sell more than $300 million worth of products at the show, according to the association.

Photo by Maxine Usdan

Miami officials in the midst of the boat show effort finally pulled out a 2010 master plan for Virginia Key. The show is to be held surrounding Miami Marine Stadium, which hasn’t been used for 20-plus years.

Cathy Rick-Joule, manager of the boat show, told commissioners of the large economic impact the event has on the area. She said the boat show’s influence is global.

Commissioner Frank Carollo said she didn’t need to sell the commission on the value of having the popular event in Miami.

“We want the boat show back in Miami – where it belongs,” he said.

Since November, City Manager Daniel Alfonso has been negotiating with the association to host the 2016 show on Virginia Key. The boat show for years has been held each February at the Miami Beach Convention Center, which is being rebuilt and can’t handle the show next year.

The license approved Jan. 8 allows the association to host the boat show on land and water surrounding Miami Marine Stadium. Commissioners also approved spending up to $16 million on improvements to the site, to be paid for by a bond sale.

In exchange, the association is to pay the city $1.1 million a year and 50% of food and beverage sales income at the show.

Renovation of the stadium is not part of those improvements.

There is a separate program to save the iconic concrete stadium, closed since Hurricane Andrew in 1992.

The license is not for a fixed term, and may be terminated or revoked by the city at-will. Although there is no binding longterm agreement between the city and the association, the city can review the license after 5 years.

In 2007, Miami city officials ‘Imagine a full-fledged began a years-long process of soccer community out writing, amending and finally there.’ adopting a master plan for the Marc Sarnoff development of Virginia Key in 2010.

That plan has been sitting on

a shelf literally gathering dust for more than four years – until last week.

With the possibility of securing the Miami International Boat Show on the city-owned barrier island, suddenly the master plan for the key is back in play.

Now city officials and commissioners are talking about other uses for the property that surrounds the abandoned stadium, including perhaps soccer fields for youth and adult leagues.

Mr. Alfonso said the city always planned to develop Marine Stadium Park, “and now we have a partner to help.”

He stressed the need to get moving on improvements to the key property, as the 2016 boat show is just 13 months away.

“We need to get this moving to get all of the infrastructure in place,” Mr. Alfonso said.

Alice Bravo, deputy city manager, showed plans for the area around the stadium with improved water and sewer, drainage and lighting, and strengthening the surface areas as green space able to stage activities and special events. The plans show possible use of temporary event structures – looking like large tents – with elaborate layouts, wood floors, air conditioning, and some two stories high.

While there was plenty of support for a flex park next to the stadium, some objected to potential side effects.

Village of Key Biscayne Mayor Mayra Peña Lindsay told commissioners that although the village was promised a voice in deciding the fate of Virginia Key, village officials had had “no meaningful input” in the last several weeks, and she repeated her earlier warning to the city not to rush a decision.

She earlier voiced serious concerns with the impact of

major development on the key, reminding city leaders that the Rickenbacker Causeway is the only access to Virginia Key and Key Biscayne.

Ms. Peña Lindsay spoke of potential gridlock on the causeway during the week of the boat show, imploring city commissioners to consider that they might be severing access for thousands to the public beaches on Key Biscayne.

City officials and Ms. RickJoule told commissioners the auto traffic generated by the show will be dealt with by use of off-site parking facilities and shuttles and water taxis, explaining that the show’s producers have years of experience operating on constrained sites.

“We are looking forward to being good neighbors,” said Ms. Rick-Joule.

While discussing whether to approve the license for the boat show, Commissioner Francis Suarez said, “We should look at this as phase one.”

Phase one is securing the boat show for 2016, he said. Phase two will be to consider longterm plans and tenants for Marine Stadium Park. Phase three will be the restoration of the stadium itself, Mr. Suarez said.

He suggested that his fellow commissioners make sure phase two is done right in order to pay for long-term expenses.

Commissioner Marc Sarnoff favored restoring the stadium and making improvements to the park but repeated an earlier point: what will the park look like the remainder of the year after the boat show has come and gone?

“Imagine a full-fledged soccer community out there,” he said.

“As we grow and push outward,” Mr. Sarnoff said of the city, consider what other uses

or tenants could be welcomed at Marine Stadium Park. Perhaps Art Miami might one day be interested, he suggested.

The decaying concrete stadium has been vacant more than 20 years. In a separate move, the commission last month accepted a $1 million state grant for stadium restoration.

The license approved Jan. 8 includes a diagram showing the stadium fenced off for the 2016 boat show and notes a 10-foothigh fence displaying a rendering of future stadium enhancements printed on mesh screen.

In November, the non-profit Friends of Miami Marine Stadium handed the city an elaborate $121 million plan to renovate the stadium and develop the surrounding area into a maritime complex, with commercial space, a 125,000-square-foot expo center, a new marina and a 280-slip dry-dock storage facility.

Commissioners rejected the plan and instead kept it simple, directing Mr. Alfonso to get the boat show for 2016 and maybe longer and create a proposal to fund stadium restoration.

Commissioners last week directed Mr. Alfonso and staff to come back within two months with all funding options for the improvements to Virginia Key, not limited to bonding for the money.

Mr. Carollo said he was reluctant to approve the $16 million bond proposal without having a long-term commitment or revenue stream.

“My concern is, in two or three years the boat show leaves and we are left with that debt service,” he said.

“I’d prefer to have some longer agreement,” said Mr. Carollo.

Mr. Alfonso was also directed to quickly return with a potential long-term proposal for the boat show.

‘My concern is, in two or three years the boat show leaves and we are left with that debt service.’

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MIAMI TODAY

OUTLOOK 2015

WEEK OF THURSDAY, JANUARY 15, 2015

Film industry’s health rests on renewed incentive program

BY CATHERINE LACKNER

As was the case last year, the health of Miami’s film industry rests largely on whether the Florida Legislature returns funding to what was once a robust incentive program. That incentive program, among other factors, attracted five television shows and several movie productions to the area several years ago. But the legislature did not renew funding in its past two sessions.

“Miami-Dade County continues to attract film and television shows and commercials, but on a reduced scale due to lack of funding of the state’s entertainment production tax credit program,” said Sandy Lighterman, county film commissioner. Currently filming in South Florida are HBO’s “Ballers,” Fox’s “Graceland” and Netflix’s “Bloodline.”

“These shows have tax credits from the state’s program,” Ms. Lighterman said. “That’s

the only reason they are still shooting here.”

A fourth project, “The Trap,” a feature film starring Janie Foxx, Benicio Del Toro and Jonah Hill, begins shooting soon.

These projects will bring approximately $100 million of direct spending into the county, according to Ms. Lighterman.

In 2010, a Jobs for Florida bill designated $242 million over five years for tax credits for film studios and other production companies. By March 2011, $227 million of the credits had been committed, with the majority going to so-called high impact television shows like “Magic City,” “The Glades” and “Burn Notice,” all of which have since ended. When they did, incentives that were reserved for them were returned to the program.

“Bloodline” and “Ballers” will air this spring and summer.

“That should give South Florida major screen time on a worldwide platform, which is great

Photo by Maxine Usdan

Industry awaits filing of bills in House, Senate, said Sandy Lighterman.

exposure for both the Miami and the Florida brands,” Ms. Lighterman said.

“We are lucky to have television commercials and still catalog projects that continue to come to Miami-Dade County on a consistent basis,” she added.

Telemundo, Univision and Cisneros Media Distribution (for-

merly Venevision) create Spanish-language telenovelas that infuse $50 million to $75 million into the economy and employ hundreds of cast and crew on a continuous basis, she added.

“However, Telemundo, Univision and Cisneros all take advantage of the state’s production incentive program, and

the lack of funds will soon affect their bottom lines,” Ms. Lighterman said. “All have facilities in other locales, like Mexico and Venezuela, and could take their projects out of Miami if it becomes more costeffective to do so.”

The entertainment production industry is cautiously optimistic that the legislature will add funding to the program the 60day session that begins March 3, she said. Steve Crisafulli, incoming speaker of the Florida House of Representatives, has identified funding the tax credit program as a priority and has chosen Rep. Michael Miller of Orange County to sponsor a bill, she added. “State Sen. Nancy Detert of Sarasota will again be the champion on the Senate side. We are awaiting bills to be filed in both the House and Senate,” Ms. Lighterman said.

If efforts are unsuccessful for a third consecutive year, she predicted an “exodus of cast, crew and businesses fleeing to Georgia and Louisiana,” states that have secure and continuous incentives.

That’s not a far-fetched scenario, said Andrew Nathanson, executive producer, photographer and location manager for Gator Films. While preparing to manage a film’s location here, he spoke with a crew member currently working in Atlanta. More than 20 major projects are filming there, compared to only a few in South Florida, the crew member noted. “Like a volume of veteran crew members here, this person migrated to where the work is,” Mr. Nathanson said.

This year begins with incentives depleted, but if the legislature revitalizes the program, “It could reinvigorate the industry and draw more productions here, which is critical to both the film and tourism industries,” he said.

If not, “the state in general and South Florida specifically will lose out on both hard dollars spent here and the diminished tourism exposure,” Mr. Nathanson said. “Hopefully, Florida leadership sees fit to reinvest in incentives, so business picks up by the end of the year.”

The film industry must stand together if progress is to be made this year, said Pieter Bockweg, executive director of the City of Miami’s Omni Community Redevelopment Agency.

He oversees the agency’s planned film studio and serves on the Florida Film and Entertainment Commission.

That group “is working on developing a unified message so that the industry can speak with one voice and communicate effectively to our legislators about the statewide benefits of renewing the tax incentives,” he said.

Mr. Bockweg said he is looking forward to working with the film community locally and around the state to lobby the legislature to resurrect the tax incentives and restore funding.

The studio, dubbed the Florida Film and Television Center, is under renovation and is set to open later this year.

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MIAMI TODAY

OUTLOOK 2015

WEEK OF THURSDAY, JANUARY 15, 2015

Strong residential will see price rises slow, maybe dip a bit

BY SUSAN DANSEYAR

Those who are immersed in residential real estate every day believe the market will stay strong in 2015, with leveling off on the appreciation we’ve seen for the past few years and a possible drop in prices if the inventory goes beyond what is considered healthy.

Looking toward the next 12 months in the residential market, buyers will still flock to Miami, according to Adam G. Kutner, broker and co-owner of Grove Town Properties. As Miami continues to grow, he said, so will demand for housing.

“Almost every condo tower that is planned tends Adam G. Kutner to sell more than 70% of its units within the first six months of launch and sell out prior to completion,” Mr. Kutner said. “We live in one of the hottest markets in the world with beautiful beaches and amazing weather nine months out of the year. Demand will always be hot in Miami.”

Victor Ballestas, principal of Integra Investments, agrees that residential demand is still strong from the international market and areas of the US, particularly in New England.

For the majority of 2015, he said it will be “business as usual” but he believes the future of the Victor Ballestas market’s outlook going forward depends in large part on how many of the residential projects planned actually get out of the ground.

“There aren’t a lot of projects due in the next 12 months but we’ll start seeing more in 2016 and then a more normalized absorption rate,” Mr. Ballestas said. “Because of all the planned projects, demand is being dis-

Photo by Maxine Usdan

Condo towers are rising in Swire’s Brickell City Centre, but fewer new projects are anticipated in 2015.

persed.”

Moreover, Mr. Ballestas says he believes there will be a leveling off in appreciation of property that we’ve seen in the past three years.

Miami Beach will remain strong as will well-positioned projects that are priced right and unique, he said. He said banks are coming back to more

normal lending practices, which will bring back the local buyer.

The number one metric in the residential real estate business is the number of months’ supply on the market at a given point, said Ron Shuffield, president and CEO of EWM Realtors. “Between six and nine months is a fair market.”

If supply is below six months,

he said, prices go up; if supply moves beyond six to nine months, prices will stagnate.

At the end of December, Mr. Shuffield said, Miami-Dade inventory on the market was 5,814 single-family homes and 11,253 condos. A year prior, he said, Miami-Dade had on the market 5,194 single-family homes (an 11.9% increase in

Photo by Maxine Usdan

“I would not run out and develop in Miami-Dade now,” said Ron Krongold, at Midtown Miami Residences.

inventory for 2014) and 9,338 condos (a 20.5% increase in inventory).

Looking forward, Mr. Shuffield said, we’ll probably see inventory move above the ninemonth range for condos and, thus, the market will Ron Shuffield temper back.

Ron Krongold, owner of Midtown Miami Residences, described his outlook for 2015 as cautious. “I would not run out and develop in Miami-Dade now,” he said. “We should have a six-month inventory of [condo] projects but, with all the new supply, we’re almost at a nine-month inventory.”

Therefore, Mr. Krongold said, it will be much more difficult for developers to sell the units and the prices will have to come down.

“Sales will slow down and there will be a substantial correction,” he said. Yet he thinks the oversupply will eventually be absorbed and demand will be constant by the middle of 2016.

Miami is such a multicultural city, Mr. Kutner said, that it’s hard to say exactly who or what nationality is going to play the strongest role in purchasing real estate.

“For the past few years, it has been the Russian, Brazilian and Chinese buyers that we all keep hearing about,” Mr. Kutner said. “As the dollar regains its strength against world economies, we will see another wave of buyers come from a country that they feel will need to protect their capital.”

He points to Coconut Grove, as an example, where all the condo buildings going up on Bayshore Drive are close to 80% sold out. “The new buyers of these units are out of NYC, Wall Street and Hedge fund owners who are flocking down to South Florida to take advantage of both the weather and booming areas such as the Grove, Midtown and the Design District.”

Pricing for residential real estate as we start 2015 is still up, Mr. Kutner said. “New construction properties on Bayshore Drive are starting in the $800 price per square foot up to $1,400 per square foot,” he said.

“There’s talk that a new tower is going up in the Grove that will start selling in the $1,800 price per square foot for new construction.”

Single-family home and condo prices are back to all time highs, Mr. Kutner said, and will most likely stay at these levels for the next few years. He said interest rates are still low, assuming the Fed will raise rates slowly but steadily, which will help stabilize the market.

With Miami being an international city, Mr. Kutner said, there will always be a huge range of buyers will be looking for property in Miami-Dade.

“I am a Miami native,” he said. “I have seen friends leave Miami for years only now to start returning to their home town.”

WEEK OF THURSDAY, JANUARY 15, 2015

OUTLOOK 2015

MIAMI TODAY

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Bright visitor industry star might face room rate pressures

BY SUSAN DANSEYAR

Market watchers see a continuing bright outlook for MiamiDade’s visitor industry in the coming year, with a possible dip in some room rates as new hotels come online.

The hotel industry in greater Miami ranks in the top five for occupancies and room rates relative to its peers (such as New York, San Francisco, Boston and Honolulu), said Scott Berman, industry leader of the hospitality and leisure consulting practice for PwC. He said the performance figures for 2014 show an 80% occupancy in Miami-Dade County with rates increasing $10 a night.

“That means eight out of 10 rooms in the county sold every night with tourists being turned away some days,” he said. Taking into account the months when tourism is slow here, Mr. Berman said, those numbers are robust and bode well for the year ahead.

“It’s difficult to deliver occupancies of over 80%,” he said.

“Based on the performance of 2014, I see continued room rate growth.”

There’s new supply coming online in the coming year and beyond, Mr. Berman said, and “new players” tend to put pressure on room rates.

“Some rate growth may be muted by the new supply, but that’s normal,” he said. “Competition has always been the Achilles heel, but this market has been resilient. There are monetary dips to absorb the new supply but, overall, we have had very few failures.”

James C. Anderson, director of sales and marketing for Dream South Beach, says he believes the supply growth for 2015 will be greater than the demand growth and it will take a bit of time for the demand to catch up with the supply.

“We have not seen a supply growth like this in a long time,” he said. “Many hotels will be very aggressive with their rates to steal share, knowing the new inventory that came online in the fall 2014 and first quarter 2015 will be offering more affordable introductory rates as they establish themselves in the market.”

Final numbers for 2014 aren’t

Photo by Maxine Usdan

80% of hotel rooms were booked on average every night in 2014. But more rooms might push down rates.

out yet but, based on indicators, it was a record year for tourism, said Rolando Aedo, senior vice president for the Greater Miami Convention & Visitors Bureau.

In February, the Greater Miami Convention & Visitors Bureau will be announcing 2014 was a record year. That follows multiple record years, Mr. Aedo said, which is always difficult to uphold.

“With any attraction, the way to sustain it is to add new elements of discovery,” he said.

“Miami is putting emphasis on all of our neighborhoods like Little Haiti and Little Havana. People want to see those authentic neighborhoods.”

Interestingly, Miami has more international tourists (51%, compared with 12% for the entire state) than domestic (49%). That makes the tourism mix unique, Mr. Aedo said. “Our tourists stay longer and spend more money.”

That, in turn, creates more jobs.

Mr. Aedo pointed to 1 Hotels & Residences in South Beach, which is to open in February. The hotel hired 1,000 employees, 80 of whom are managers earning $75,000 and more per year.

“We had 50 months of sustained job growth, and this industry generates a lot of it,” he said.

“We project the job growth will continue in 2015.”

‘We had 50 months of sustained job growth, and this industry generates a lot of it. We project the job growth will continue in 2015.’

Rolando Aedo Occupancy in 2014 was 78.6% for the entire year and surveys and analysts forecast occupancy will rise at 1.5% to 80% in 2015, Mr. Aedo said. The average room rate for 2014 was $184.31, 5.4% higher than in 2013 and number four in the nation. In 2015, Mr. Aedo said, the industry is predicting a rise of 6.2% to $195.67 per night.

More people are coming to Miami, he said, and 2015 will see additional visitors. That’s good

not only for the hotel industry but the general economy, as sales and tourism taxes help fund Miami’s sports and sports.

For 2015, Mr. Aedo says he believes there will be more international visitors from Latin America as well as Germany and England, the number one and two markets, respectively. He also sees the LGBT customer as a key market, particularly after the recent announcement of same-sex marriages that will bring destination weddings and generally encourage visits to this community.

Miami-Dade can be carved into a number of submarkets, Mr. Berman said. Those include Miami Beach, Coral Gables, Airport West, West Dade, South Dade, Brickell and downtown – all of which have their own profile and visitor outlook for the next 12 months.

“There’s always an anomaly somewhere so you can’t really compare them,” he said. In general, though, Mr. Berman said the hotels serve three major geographies, all converging on MiamiDade from Europe, Latin America and the US. That’s what makes MiamiDade’s hotel industry so successful, Mr. Berman said. “We draw consumers from three different geographies. If one catches

a cold, we can pull from the other two.”

Two other important factors for positive visitor growth in 2015 that Mr. Berman sees include the lower fuel prices, which he said will inspire tourists to take a vacation, and the proliferation of the cruise industry that’s a strong demand generator.

Brett Orlando, area managing director for Thompson Miami Beach, also sees increased demand for 2015.

“Thompson Miami Beach is coming off a tremendously successful opening in the fourth quarter of 2014. We were able to capture a significant amount of attention regionally, nationally and internationally that will propel us into the first quarters of 2015,” he said.

From there, Mr. Orlando said, Thompson Miami Beach intends to continue a strong marketing push that combines a variety of tactics and strategies.

“Our goal is to maintain communication with target markets, sharing news and updates that reinforce who we are from the brand level to the property level and highlight how that distinguishes us in the market,” he said. “Additionally, we are extremely focused on our local market. We understand the importance of the community that surrounds us and strive to make them a priority. We brought together a group of amenity partners that would resonate in Miami and feel authentic. We also extend perks such as $5 valet parking.”

For 2015, Michelle Anseeuw, director of sales and marketing for Eden Roc Miami Beach, foresees a slight drop in international travel due in part to the dollar being stronger and the international guests’ acquisition power being lower.

“Brazilian economy is not as strong, so we are forecasting softer tourism from this market in particular,” she said. “We do anticipate for the US /domestic tourism to be higher, given the price of gas and the higher disposable income available to many, including families. Given this fact, key vacation timeframes such as long weekends, and summer, should see an uptick on domestic USA tourism.”